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Re: Network end users to pull down 2 gigabytes a day, continuously?

  • From: Marshall Eubanks
  • Date: Sat Jan 13 07:18:17 2007

Dear Mikael;

On Jan 13, 2007, at 6:45 AM, Mikael Abrahamsson wrote:


On Sat, 13 Jan 2007, Marshall Eubanks wrote:

For the US, an analysis by Kenneth Wilbur
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=885465 , table 1, from this recent meeting in DC
http://www.web.virginia.edu/media/agenda.html

Couldn't read the PDFs so I'll just go from your below figures:

shows that the cost per thousand per ad (the CPM) averaged over 5 networks and all nights of the week, was $ 24 +- 9; these
are 1/2 minute ads. The mean ad level per half-hour is 5.15 minutes, so that's 10.3 x $ 24 or $ 247 / hour / 1000. This is for the evening; rates and audiences at other times or less. So, for a 1/2 hour evening show, on average the VOD would need to cost at least $ 0.12 US to re-coup the ad revenues. Popular shows get a higher CPM, so they would cost more. The Wilbur paper and some of the other papers at this conference present a lot of breakdown of these sorts of statistics, if you are interested.

Thanks for the figures. So basically if we can encode a 23 minute show (30 minutes minus ads) into a gig of traffic the network (precomputed HD 1080i with high VBR) cost would be around $0.2 (figure from my previous email, on margin) and pay $0.2 to the content owner, they would make the same amount of money as they do now? So basically the marginal cost of this service would be around $0.4-0.5 per show, and double that for a 45 minute episode (current 1 hour show format)?


Yes - you saw I made a factor of two error in this (per hour vs per half hour), but, yes, that's the size you are talking about.

A technical issue that I have to deal with is that you get a 30 minute show (actually 24 minutes of content) as
30 minutes, _with the ads slots included_. To show it without ads, you actually have to take the show into a video
editor and remove the ad slots, which costs video editor time, which is expensive.

So question becomes whether people might be inclined to pay $1 to watch an adfree TV show? If they're paying $1.99 to iTunes for the actual download right now, they might be willing to pay $0.99 to watch it over VoD?

As you said, of course this would take enormous amount of time and effort to convince the content owners of this model. Wonder if ISPs would be interested at these levels, that's also a good question.


A business model I have wondered about is, take the network feed, pay the subscriber cost, and sell it over the Internet
as an encrypted channel _with ads_.

Would you be willing to pay $ 5 or even $ 10 per month to watch just one channel, as shown over the air ?
I would, and here's why.

In the USA at least, the cable companies make you pay for "bundles" to get channels you want. I have to pay for
3 bundles to get 2 channels we actually want to watch. (One of these bundle is apparently only sold if you are already getting another, which we don't actually care about.) So, it actually costs us $ 40 + / month to get the two channels we want (plus a bunch we don't.) So, it occurs to me that there is a business selling solo channels on the Internet, as is, with the ads, for order $ 5 - $ 10 per subscriber per month, which should leave a substantial profit after the payments to the networks and bandwidth costs.

--
Mikael Abrahamsson    email: [email protected]


Regards
Marshall